Whole Foods Is All Teams

Democracy & Discipline

The 65-year-old supermarket industry is the last place to look for radical ideas about work and management. It's a stumbling giant with shrinking sales, razor-thin margins, and chronic labor troubles. Too often, the shopping experience is synonymous with bruised produce, bad lighting, long lines, and surly cashiers. Supermarkets are about brawn not brains -- it's a business where every penny counts and double coupons qualify as a profound strategic innovation. John Mackey and his colleagues play by different rules -- rules that offer powerful lessons for companies in all kinds of industries. The Whole Foods strategy combines democracy with discipline. The Whole Foods culture braids a strong sense of community with a fierce commitment to productivity. It's a virtuous circle: rank-and-file participation reinforces individual attention to performance and profits; solid financial results give people more freedom to innovate. Three principles define how the company operates:

1. All work is teamwork. Everyone who joins Whole Foods quickly grasps the primacy of teamwork. That's because teams -- and only teams -- have the power to approve new hires for full-time jobs. Store leaders screen candidates and recommend them for a job on a specific team. But it takes a two-thirds vote of the team, after what is usually a 30-day trial period, for the candidate to become a full-time employee.

This hiring referendum affects the behavior of everyone involved in the process: the job candidate, the team, the store team leader. Store leaders take great care not to recommend people they don't think the team will approve. Recently, for example, Aimee Morgida dismissed a team candidate before the 30-day trial period was over. Morgida, a typical Whole Foods manager, is 34, college-educated, and running her third supermarket, a Bread & Circus (one of several regional names under which the company's stores operate) in Cambridge, Massachusetts. Her store is not only the highest revenue supermarket in the Whole Foods chain, it's also the biggest natural-foods grocery in the country.

The candidate "was shocked" by the dismissal, Morgida says. "I said, 'Three people had to talk to you about having your hands in your pockets and leaning against counters in front of customers.' This person said, 'I didn't realize it was that serious.' That [reaction] just reinforces the decision we made."

Teams themselves routinely reject candidates. According to CEO Mackey, teams don't become effective until they've rejected someone. "They're saying, 'This person isn't good enough to be on our team.' They're standing up to the leader, taking ownership of their team, saying, 'Go back and try again.'"

Who succeeds at Whole Foods? People who are serious about food, have a knack for pleasing customers, and can tolerate the candid give-and-take that's a necessary part of democracy -- all qualities that are hard to judge without working alongside someone for a while.

Ron Megahan, 25, runs the Bread & Circus store in Wellesley, Massachusetts. It's a small, frumpy store that's begun to show its age. But Megahan is a bundle of energy and ideas, a strong-willed leader who prowls the selling floor in a green apron. He's also a fan of the hiring system -- even when teams reject candidates he proposes.

"There are people who are really good about working when the manager is on the floor," Megahan says, "but as soon as the manager disappears, they lose control." At Whole Foods, "I'm not the one you need to impress. It's your fellow team members. And they will be as tough as they can be, because ultimately [the hiring decision] will be a reflection on them."

Team members are tough on new hires for another reason: money. The company's "gainsharing" program ties bonuses directly to team performance -- specifically, sales per labor hour, the most important productivity measurement at Whole Foods. Democracy reinforces discipline: vote for someone who doesn't perform, and your bonuses may go down within months.

The first prerequisite of effective teamwork is trust. At Whole Foods, building trust starts with the hiring vote. Another element involves salaries. How better to promote trust (both among team members and between members and leaders) than to eliminate a major source of distrust -- misinformed conjecture about who makes what? So every Whole Foods store has a book that lists the previous year's salary and bonus for all 6,500 employees --by name.

The open-salary policy is undeniably radical. But its trust-building payoff is substantial. CEO Mackey initiated the policy in 1986: "I kept hearing from people who thought I was making so much money. Finally, I just said, 'Here's what I'm making; here's what [cofounder] Craig Weller is making -- heck, here's what everybody's making.'"